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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The price of a good measured in units of currency
Determinants of elasticity
Absolute prices
Negative externality
Producer surplus
2. The sum of consumer surplus and producer surplus
Total Product of Labor (TPL)
Incidence of Tax
Total Welfare
Normal Profit
3. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Inferior Goods
Price elasticity
Decreasing Cost industry
Price Ceiling
4. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Income Elasticity
Free-Rider Problem
Necessity
Explicit costs
5. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Long Run
Law of Increasing Costs
Income Effect
Perfect competition
6. Ed < 1
Price inelastic demand
Monopolistic competition
Derived Demand
Production function
7. A good for which higher income decreases demand
Determinants of Demand
Inferior Goods
Natural Monopoly
Monopoly long-run equilibrium
8. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Income Effect
Oligopoly
Average Fixed Cost (AFC)
Constant cost industry
9. Ei = (%dQd good X)/(%d Income)
Economic Growth
Derived Demand
Income Elasticity
Implicit costs
10. The rational decision maker chooses an action if MB = MC
Marginal Productivity Theory
Income Effect
Marginal Analysis
Total Revenue
11. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Constant cost industry
Determinants of Demand
Public goods
Incidence of Tax
12. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Allocative Efficiency
Perfectly elastic
Non-collusive oligopoly
Law of Diminishing Marginal Utility
13. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.
Perfectly competitive long-run equilibrium
Free-Rider Problem
Inferior Goods
Economies of Scale
14. The practice of selling essentially the same good to different groups of consumers at different prices
Monopolistic competition long-run equilibrium
Price discrimination
Scarcity
Marginal Product of Labor (MPL)
15. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Substitution Effect
Constant Returns to Scale
Public goods
Price floor
16. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Price inelastic demand
Normal Profit
Subsidy
Average Fixed Cost (AFC)
17. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Perfectly elastic
Free-Rider Problem
Marginal Revenue Product (MRP)
Surplus
18. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Demand for Labor
Price Elasticity of Supply
Law of Diminishing Marginal Utility
Total Revenue
19. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Least-Cost Rule
Shutdown Point
Substitute Goods
Spillover costs
20. The marginal utility from consumption of more and more of that item falls over time
Marginal Cost (MC)
Monopoly long-run equilibrium
Law of Diminishing Marginal Utility
Cross-Price Elasticity of Demand
21. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Positive externality
Diseconomies of Scale
Marginal Benefit (MB)
Producer surplus
22. Ed = 8 - infinite change in demand to price change
Determinants of Demand
Private goods
Perfectly elastic
Total Welfare
23. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Constrained Utility Maximization
Relative Prices
Average Fixed Cost (AFC)
Economics
24. Exists if a producer can produce a good at lower opportunity cost than all other producers
Substitution Effect
Comparative Advantage
Excise Tax
Perfectly elastic
25. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Long Run
Marginal Benefit (MB)
Price discrimination
Market Equilibrium
26. The total quantity - or total output of a good produced at each quantity of labor employed
Price elasticity
Monopolistic competition
Total Product of Labor (TPL)
Increasing Cost Industry
27. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry
Total Fixed Costs (TFC)
Total Revenue
Allocative Efficiency
Oligopoly
28. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Determinants of Demand
Long Run
Income Elasticity
Excise Tax
29. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Absolute Advantage
Accounting Profit
Marginal Productivity Theory
Perfectly inelastic
30. A firm that has market power in the factor market (a wage-setter)
Monopsonist
Market power
Economic Growth
Marginal Resource Cost (MRC)
31. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus
Long Run
Normal Profit
Price floor
Total variable costs (TVC)
32. The additional benefit received from the consumption of the next unit of a good or service
Price floor
Marginal Benefit (MB)
Marginal Productivity Theory
Total Product of Labor (TPL)
33. Occurs when LRAC is constant over a variety of plant sizes
Decreasing Cost industry
Constant Returns to Scale
Absolute Advantage
Determinants of Labor Demand
34. 0 < Ei < 1
Necessity
Average Variable Cost (AVC)
Marginal Resource Cost (MRC)
Income Elasticity
35. AVC = TVC/Q
Oligopoly
Average Variable Cost (AVC)
Relative Prices
Implicit costs
36. Models where firms agree to mutually improve their situation
Marginal tax rate
Collusive oligopoly
Average Fixed Cost (AFC)
Monopoly
37. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Market power
Spillover benefits
Economic Growth
Law of Supply
38. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic
Price elasticity
Total Revenue
Incidence of Tax
Cross-Price Elasticity of Demand
39. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Spillover costs
Economic Growth
Economies of Scale
Income Effect
40. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Dead Weight Loss
Break-even Point
Consumer surplus
Implicit costs
41. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Income Effect
Positive externality
Monopolistic competition long-run equilibrium
Derived Demand
42. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits
Cartel
Price inelastic demand
Total variable costs (TVC)
Economics
43. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Marginal Product of Labor (MPL)
Perfectly competitive long-run equilibrium
Law of Diminishing Marginal Utility
Subsidy
44. Es = (%dQs) / (%dPrice)
Price elasticity
Comparative Advantage
Price Elasticity of Supply
Relative Prices
45. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly
Shortage
Four-firm concentration ratio
Price elasticity
Determinants of Labor Demand
46. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Total Revenue Test
Determinants of Supply
Short run
Utility Maximizing Rule
47. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Monopolistic competition
Total Fixed Costs (TFC)
Excess Capacity
Profit Maximizing Resource Employment
48. ATC = TC/Q = AFC + AVC
Monopsonist
Shutdown Point
Average Total Cost (ATC)
Economics
49. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Cartel
Law of Increasing Costs
Income Elasticity
Negative externality
50. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Natural Monopoly
Determinants of elasticity
Law of Diminishing Marginal Utility
Price floor